John Milsom, David Standish, Jeremy Outen v Mukhtar Ablyazov (2011)
It was appropriate to discharge a temporary undertaking limiting the use by receivers of documents disclosed to them in connection with arbitration proceedings. Arbitration confidentiality or privacy was not absolute and the receivership's purpose in getting in and preserving complex commercial assets would be hampered by the requirement either to give notice or to apply to the court on every occasion where the need for use of the disclosed documents arose.
Arbitration confidentiality or privacy was not absolute. Its preservation in any particular situation was only the starting point and might be overridden where either the public interest or the interests of justice required, Michael Wilson & Partners Ltd v Emmott (2008) EWCA Civ 184, (2008) Bus LR 1361 and Department of Economic Policy and Development of the City of Moscow v Bankers Trust Co (2004) EWCA Civ 314, (2005) QB 207 followed. The documents in issue in the instant case consisted of or contained information which might broadly be divided into two classes: material originating from X's side and material originally emanating from V as the opposing parties. The deployment by X of his own documents or information in an arbitration, whether in a statement of case, a witness statement or by exhibiting the documents themselves, did not make the information itself confidential if it was not originally of the inherently confidential type. Arbitration confidentiality in that context meant only that the fact of its use in the arbitration was confidential. It would be wrong to restrain M's use for the purposes of the receivership of X's information or documents in that class, and unlikely that M would need to explain to any third party that X had used that information in an arbitration. Even if that disclosure itself was expedient, there was no reason why X's arbitration confidentiality or privacy rights should stand in the way. The interests of justice would be better served by the effective preservation by M of X's assets. As to the second class of documents, V had consented to the disclosure to and use by M of that information. M were experienced officers of the court who might generally be trusted to perform their difficult task without having to be micro-managed by the court on repeated applications, either by X to restrain a particular notified use, or by themselves to use information without tipping off X. The getting in and preservation of complex commercial assets that are the subject of a receivership demanded on occasion speed, flexibility and the need in unpredictable circumstances to take steps requiring the use of disclosed information which would be hamstrung if attended by a prior requirement either to give notice or to apply to the court on every occasion where the need for that use should arise. The restriction in the instant case was completely impracticable. The temporary undertaking given was, accordingly, discharged, subject to the direction that wherever in future M proposed to disclose originally private or confidential information obtained by them pursuant to the receivership order, they give specific consideration to the expediency for the purposes of the receivership of the disclosure of each part of it and to the question whether that expediency was a reasonable basis for overriding X's original, but of course heavily qualified, rights of privacy and/or confidentiality (see paras 30-34, 36-37, 45-46 of judgment).
The applicant receivers (M) applied for the discharge of a temporary undertaking concerning the use of documents disclosed to them by the respondent (X). X was the principal defendant in substantial litigation brought by a Kazakhstan bank, of which X was formerly the chairman, seeking to call him to account for the alleged widespread misapplication of its funds. The bank had obtained a worldwide freezing order against X, in support of which a receivership order was obtained permitting M to use and/or disclose all information that came, or would come, or will come, into their possession for the purposes of the receivership. Two companies (V) in which X had a beneficial interest subsequently applied under theArbitration Act 1996 s.44 for interim relief for the preservation of the subject matter of pending arbitration proceedings between them and X's joint venture partners and entities controlled by them. Following their concern that there might be a risk to X's property, which they were empowered to preserve, M requested disclosure of documents relating to the s.44 application. Whilst V consented to the disclosure, X declined. The court subsequently ordered the disclosure of those documents subject to a temporary undertaking, pending the effective hearing of the application, by M not to disclose any of the documents to any third party, including the Kazakhstan bank, without seven working days' notice to X's solicitors, specifying the information or documents which they intended to disclose and the reason for their wishing to do so. X duly supplied the relevant documents. It fell to be determined whether the temporary notice regime should be made permanent, discharged or replaced by some other restriction upon the use or disclosure of the documents by M. X contended that the notice regime should be made permanent because otherwise his rights to confidentiality in the arbitration process, including the s.44 application, would be fatally undermined in a manner not warranted by the receivership order.
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08 Apr 2011
LTL 8/4/2011 :  EWHC 955 (Ch)
International & Offshore